Cloud and online storage providers will be subject to the private copy levy. If we do not know according to which provisions the decision will be applied in France, the European courts have decided: the cloud is – also – a copying medium.
As our colleagues from Next INpact remind us, the private copying levy is governed by European law, in particular by the directive on copyright and related rights, which provides for an exception to apply it. This is the case in France, but also in Austria, where the case opposing the Austrian Sacem (Austro-Mechana) to the company Strato AG (a cloud service provider) ended up landing before the Court of Justice of the Union. European Union (CJEU). His role ? Settle in this dispute and determine whether storage in the cloud is a medium which must, yes or no, be subject to the private copying levy.
The highest European court therefore issued a judgment on March 24, 2022 according to which the private copying exception also concerns the cloud, paving the way for compensation for rights holders. She specified that this device covers any form of copying, direct or indirect, temporary or permanent. The fact of storing a work on a server for its online use, via the cloud, is therefore in his eyes a reproduction subject to the definition of private copy. It adds that the downloading of a work stored in this way is also considered to be a duplication. For her, the server is therefore a medium eligible for the private copying fee, even when it is only used for a backup copy.
Mandatory damage compensation
As a reminder, the private copying levy paid on the sale of smartphones, computers, tablets, boxes, USB keys and other external hard drives, and even soon on refurbished products, must be used to repair damage to the rights holders whose works may be copied by users. As summarized by our colleagues: “If there are reproductions, if these reproductions relate to works, then there is also damage which must be compensated, and therefore compensated”. Which begs the question: will cloud providers have to pay the private copy levy? And if so, how will the compensation be calculated?
Next INpact explains that “the directive, interpreted by the CJEU, leaves a great deal of leeway for the methods of collection”, each country being free to decide on the method as long as reparation applies. Even without knowing these future provisions, the judgment of the CJEU is a victory for Sacem which, in France, has been campaigning for the subjection of cloud players to the private copying levy for nearly 10 years. Some will undoubtedly see it as a new tax hitting digital players.